Prices may spike due to 'perfect storm' of worker shortage and global supply chain crisis

Fresh fears over rising prices of products emerged on Friday (3), with some business leaders claiming that the UK is facing a “perfect storm” of worker shortages and problems with global supply chains which in turn is most likely to lead to a burst of inflation within months.

Following the disruption in supplies, consumers are now being warned of a rise in living costs in the coming months owing to sharp increases in household energy bills and food and other essential's prices.

Due to shortage of labour and heavy good vehicle (HGV) drivers, the producers, wholesalers and suppliers are forced to offer hiked payments, with extra cost mostly getting passed on to consumers.

“Vegetable oil is at its highest price now for over 30 years,” Darren Labbett, the managing director of Woods Foodservice, a wholesaler that supplies the pub and restaurant trade, told BBC Radio 4.

Cost of tomatoes has doubled in the past year, reports said, adding that consumer goods makers such as Nestle, Procter & Gamble and Unilever have warned they will be forced to hike their prices.

James Bielby, who leads the Federation of Wholesale Distributors, said: “There are chronic staff shortages throughout the food and drink supply chain presently, with up to 500,000 vacancies.”

He added: “That means all businesses, growers, processors, wholesalers and manufacturers, having to offer incentives to retain and recruit staff, and costs are rising as a result.”

Apart from a labour shortage, majorly due to Brexit, the global supply chain is also said to be under pressure. The Baltic dry index- the shipping industry’s bellwether, which measures the average prices paid for the transport of dry bulk materials across more than 20 routes- has soared to a 10-year high in recent weeks, said media reports.

The warning over the cost of living comes as millions of households face a drop in their income as the government prepares to cut universal credit by £20 a week from 6 October and close the furlough wage subsidy scheme.